That Dog Don't Hunt Part IV

You must be wondering what happened to Charlie’s company, the dog that did not hunt. There is a happy ending. With Charlie the transition took about four months. First Norman had to buy in and that took a while. He did not want to hurt Charlie. Then the hardship and chaos that Charlie was inflicting on the company became overwhelming.

Unfortunately (or fortunately for the company) Charlie had to deal with a critical medical condition which made the transition easier. He was gone for a month. The company welcomed a critical new hire who took over most of what Charlie did. For the month that Charlie was away and dealing with his medical condition there was peace in the company.

All of this got Norman totally on board and engaged with the transition. Some serious conversations ensued between Norman and his dad. Charlie stayed away embarking on his new life. The transition is now complete and the company is finally growing again and dramatically improving its service. Now the company is on the hunt. Previously it was not.

Recently the leadership group met for a quarterly huddle. Charlie came, made some comments. He stayed for about an hour and then left before the meeting was done. His involvement totally worked and left everyone satisfied. Julia commented to me that their relationship with Norman is really working. Case closed…generational transition complete.

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That Dog Don't Hunt Part III

So what is one to do when dealing with family transitions and situations? The first step is realizing that the transition needs to happen. The older generation needs to see that it is part of their role is to turn over the leadership of the company to capable younger leadership. It is important that they face their mortality and aging as a part of life that must be dealt with. A telltale sign of failure is when the older generation does not plan to leave. In fact they may be getting more involved. Consider the following as rules to live by if you want the transition from one generation to another to work and be successful. 

 

1. Design a process for the transition. 
2. For the transition to be successful, the departing CEO’s roles and responsibilities must be taken over by competent others. They can serve as mentors and guides, but their actions and duties need to be fulfilled by others.  
3. Remaining family members who are in the company must be able to run the company. Uninvolved mothers and cousins who suddenly find themselves as CEOs are typically disastrous.  
4. For the new CEO and generation that are taking on leadership roles – take them on. You are now the one accountable for the success of the company and the responsibility is yours. Embrace your new roles.
5. Speak openly about the transition. Discussions between family members are healthy, especially when you disagree. Let this be a process that is definitely talked about and designed.
6. Make the transition while everyone is healthy; before illness and the inevitable.
7. The generation leaving must let go. 
8. Whoever is leaving the company needs to engage in outside interests besides the business. Outside interests are good and they take the transitioning CEO away from the day to day. Seasoned business people are highly needed outside the family business – teach a class, adopt an entrepreneur or go see the whales in Patagonia. The transition works best when the leaving leadership has exciting plans away from the company for the future.  

To be continued...

 

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That Dog Don't Hunt Part II

When generational transitions in family business do not occur strategically, they can destructively impact the company as well destroy familial relations. This is called a double whammy. 

Alternatively transitions between generations in a family owned company can work really well. Here is an example. Steve was a gracious CEO and leader. A couple years ago, he formally retired and turned over the company to his competent son. Steve still comes to work. He is punctually in at seven and out at eleven. On a typical day, he enters the building, says hi to everyone and they engage with him in a friendly way. Then he goes off to his office where it appears that he moves one pile of papers to another pile of papers. No one is quite sure what he is doing and that’s fine. Steve’s son continues to run the company. Steve and his Son see each other daily and on occasion have lunch. The company continues to thrive. This transition works.

Another example of a successful transition; George, a former CEO and leader, lets his son and stepsons run the company, which they do well. George takes on some projects with key employees. The key employees love working with George as he knows a lot. At 73 year George is focused yet fun to work with. His involvement totally works. He provides guidance and knowledge in a very productive way. 

Then there is Susan. She inherited a very successful company when her husband passed away. At age 65 she told her two sons, “I am out of here in two years so you two better get your act together because I am leaving.” Susan had plans and a life to live. She was involved with a ministry in Africa, worked actively to educated inner city youth and aspired to coach female executives. The two year deadline drove the transition to be conducted in a positive and productive fashion. In two years Susan was able to move on. The company continues to be successful. 
To be continued next week...

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That Dog Don't Hunt

Or how to successfully transition generational leadership in family business

Charisma is what makes Charlie so appealing. At, 72, with a full head of black hair; he is healthy and hale to say the least. At work, Charlie goes by his first name. He is friendly and familiar. He is loved; you can tell that by the interactions between him and the many frontline employees. When I met Charlie last year his title was CEO though he supposedly worked half time (not really) and he did not own the company anymore (an interesting point). 

Norman, Charlie’s son, a serious and well put together man, actually owned the company. His title was Vice President (also an interesting point). Norman was running the place (not really) from behind the scenes (not really). 

At the time I met Charlie and Norman, Norman was determined to make the company successful but it was not. Sales were problematic and non-existent. Customers were quitting and reporting that the service was bad; employees were not responding to calls and not solving problems. Something at this company was amiss. The company, like a stricken battleship, was taking in water and sinking. 

Julia was the final member of this trio. What Charlie has in charisma Julia has in charm. In addition, Julia is polite. Appearing somewhat wan, she has a history of health issues. At the time I showed up she was on the mend and getting stronger. Julia was the general manager with years of experience in a large national company. All of the leadership team reported to her. Therein lay the issue.

On a typical day at the company, Charlie, the Tsunami, (did I mention that aspect?) would enter the company compound early. Charlie would find or be presented with issues by frontline employees, supervisors and managers. He would respond by giving orders and sending employees off on errands and tasks. Then calm, cool and collected Julia would arrive, encountering directions contrary to the ones set the night before. The employees and supervisors were left in a quandary on what to do. 

On one side was Julia and they had Charlie on the other side. The standoff would result in skirmishes that would continue until the prodigal son Norman appeared. At that point Norman would reproach and appease both Charlie and Julia. Time would be spent untangling everything and deciding what to do. This was a dysfunctional triangle. Productive work was not happening. It was all distracting and dramatic.    

During my years as a resource and coach for companies striving for high performance cultures I have now come across problematic transitions a number of times. It is one thing when the CEO and possibly still owner of the company at over the age of 70 still works in the company and adds value; it is quite another when he/she is no longer at their prime and off in their business judgment. On the one hand I want to be just like him/her when I am that age – healthy, hearty and engaged. However, as a resource and coach, I represent the wellbeing of a company. I need to judge when my client’s leaders are really adding value or not. 

To be continued next week, stay tuned...

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Let's Take the Family Out of Business

Rules for relatives

Business Leaders and Executives will slow and potentially destroy the growth and development of their companies if they have lower standards or different rules for family members than they have for their other employees. If you have family members in your business, and you truly love and support them, do the following:

1. Set the highest possible standards for family member behavior. Make sure they know their responsibility is to exemplify the company values beyond what any other employee does. Make it clear to family members that because they are family, more will be expected from them. For family members to remain at the company, they will be expected to work harder and longer hours.

2. Only place family members in roles where it is obvious they have the essential abilities and talent to excel and bring real results to the company.

3. Actively encourage family members not to work at the company; if they decide to do so, reinforce that it is a choice they are making.

4. If you have any unresolved issues with your siblings, cousins, children, spouse, etc., and you hope to figure them out by working together, forget about it. Go see a therapist and leave the business completely out of the equation.

Taking the “family” out of “family business” is a rich topic. Not managing family relationships in a business can have disastrous results, not just for the business but also—especially—for the family. In my view, the destruction of family relationships is tragic. Use the principles within this article to stay within the light to promote family and business harmony and growth.

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Let's Take the Family Out of Business

Why you may not be the best choice

Often the best move for family business owners is to replace themselves as president. They need to bring in someone else with more leadership skills, ability, and talent who can build and develop their biggest, most important asset: the company. Family membership is not a necessary qualification.

Johnny is a case in point. For years, he complained of the burden of running the $250 million company that he had grown from scratch with his dad. He did not like having to teach and support everybody. Finally, he made Laura—his operations VP and a very talented woman who was not a family member—the president. She proceeded to work with the company’s great leadership group and grow the organization despite a poor economy. The company achieved all their financial targets and opened a new plant.

Johnny is still chairman of the board and is semi-retired. “I exercise and do a lot of fishing,” he recently told me. “I like the Green River, but sometimes I go fishing in Colorado.” I spent several days with him on a trip overseas and had never seen him so relaxed and emotionally available; all because he recognized he was not the right person for the job and replaced himself in the role.

For more information about family business coaching click here.

Let's Take the Family out of Business

Choosing your work

Whenever possible, parents owe their children food, shelter, love, medical care, education, guidance, and coaching to become independent adults. However, they do not owe their children a job. Families and businesses have distinct and very different dynamics. When these different systems compete with each other, prepare for catastrophe.

Ernest, the chairman of the board for a manufacturing company, died. He left a series of directives in his will dictating how the company should be run: one son would be CEO and one daughter would be senior vice president of manufacturing. However the directives were not fulfilled. Instead, elderly Mom, who historically had little to do with the business, was now the majority owner and the one in charge.

Mom as business owner turned into a disaster. She made wrong business decisions in a changing environment and put the company at financial risk. Meanwhile, the son and daughter did not get control or ownership of the company they have spent their lives building. Turning this company around would be a lot easier if it were not so encumbered with family issues. The point is the leadership in your company should be based on talent and ability. If it turns out that family members actually qualify, consider it a dividend and karmic reward.

For more information about family business coaching click here.

Let's Take the Family Out of Business

My mother the boss

In another situation, the CEO and her daughter, Sally, both lived and worked together. Sally was making $40,000 a year and complaining about not making enough. The CEO—or simply “Mom”—was trying to find something for the 25-year-old marketing major to do. The CEO admitted that if her daughter were just an employee and not a family member she would let her move on.

“She should look for another job,” the CEO told me. “If I change her from hourly to salary, she would not work forty hours. What do I do with this kid?”

The CEO was in pain because she was operating from a “mothering” state and applying it to business. Mothers do not fire their youngest daughters. It can’t be done—though it is, however, acceptable for moms to complain about their daughters’ behavior

Looking at situations like this as a parent is difficult. The little darling, also known as “your baby,” is born with limitations and gifts. You have the rest of your lifetime to deal with those, and deal you must; connected by birth, blood, and genetics, you are family. As a parent, your only choice is dealing with the child you have.

But if this woman put on her “CEO hat” and looked at the situation from that point of view, a pathway would open up. As CEO, the decision about who belongs in the company is of primary concern. In Good to Great, Jim Collins says it’s all about the right person being on the right seat of the bus. In other words, it is essential that you have the right people doing the right stuff. If CEOs do this, Collins says, their companies will invariably win. In this case, the CEO needed to honestly evaluate whether Sally was a fit for the company without considering that Sally is her daughter.

For more information about family business coaching click here.

Let's Take the Family Out of Business

Pretending in order to please you

Often, children join a company because they feel they owe it to a CEO parent to carry on the family tradition—despite having little talent, passion, or ability to succeed in the business. The children spend their time attempting to hide this. Meanwhile, other employees go along with the pretense to protect their own jobs. You can imagine the problems that arise from this scenario. Here is an example.

Roberto was an artist. All he really wanted to do was paint, be with his young son, and sell his artwork. Unfortunately, he inherited a failing company, which was co-owned by another family. Roberto became the head of marketing and web design, though he had little experience or education in either. His staff—both experienced and talented—did their best to cover for Roberto, fearing their jobs would be at stake if Roberto did not succeed. The staffs’ attempts at covering for Roberto only accomplished one thing: making the whole company look bad. Brochures were sent out with the wrong pricing. Total sales decreased. Employee morale and productivity suffered. The company continued to limp along, barely surviving. This is a situation in which a business directly suffered from everyone’s good intentions.

For more information about family business coaching click here.

Let's Take the Family Out of Business

The head of the pack

Family members can lead businesses successfully. Take the case of Ralph and Samantha, a brother and sister team who are successfully running and growing their commercial laundry service. They are second-generation owners who grew up working at the business their parents started. They drove trucks, brought in clean uniforms, and took out used ones. They filled washers and hung pants. They answered phones. They have been cussed at and complimented and, in the process, have mastered both operations and customer service.

Both Ralph and Samantha are capable businesspeople who learned their industry from the ground up. They also gained experience outside of their industry and applied their experiences to their family firm. Ralph has an MBA from Harvard and worked as a financial analyst. Samantha has a Master’s in education and taught special education in the public school system. Their ability to lead and develop their family business is obvious. If they were not top executives and owners of their company, they would be CEOs and executives of someone else’s company.

For more information about Family Business Coaching click here.

Let's Take the Family Out of Business

Consider this question: if you were chartering a private plane, would you rather it was flown by a competent pilot or by a member of the business owner’s family? In this scenario, who really cares about family affiliations? You most likely want the best person for the job of getting you in one piece from Point A to Point B.

By thinking about this question, you are beginning to grapple with the issue of families in business. If you have family members in your company, you need to proceed with caution; along with potential benefits, there are clear pitfalls the savvy business owner and executive should guard against.

What do owners and CEOs want?

Business owners and CEOs want their companies to be run in the best possible way. The next question is: who can best provide this direction for their organization? Could the best candidate be a member of family? After all, these employees may have grown up in the business and been schooled by the founder. They may be steeped in specialized knowledge, fit into the company culture, and understand the company’s winning formula. They could know and love the business and its customers. It is possible that a family member really is the best candidate. Over the following weeks I will cover stories from four different family business and offer advice to family business owners.